DUKAKIS, BUSH AND THE LIMITS OF THEIR NEO-OPTIMISM

Hugh De Santis and Robert A. ManningCHICAGO TRIBUNE

Is there any room for reality in a presidential campaign?

Eight years ago Ronald Reagan ran for the presidency on a vision of optimism. Like Franklin D. Roosevelt a half-century earlier, Reagan restored the public`s faith in the American Dream. So now Michael Dukakis and George Bush are piggy-backing on Reagan`s success and running as the candidates of neo-optimism. Their vision is inspired by the same storehouse of American mythology, but it is not as politically grounded as Reagan`s and is therefore likely to be less relevant for tomorrow.

Reagan rode into America`s living rooms in 1980 like some celluloid paladin from a 1950s Western. When he arrived, the townsfolk were

downtrodden. Businessmen, farmers and workers were reeling under double-digit inflation and interest rates, the trade balance was deteriorating, and third- rate countries like Iran were defacing America`s honor with impunity. Worse yet, the town leader, Jimmy Carter, said people might have to accept greater hardship in the future.

Dr. Feelgood rescued America from the doom and gloom of Democratic politics and renewed the public spirit. He told the townsfolk what they wanted to hear: That economic progress and individual opportunity were unlimited and that the United States was still the world`s pre-eminent power. Jesse Jackson may have coined the phrase, but it was Reagan who kept hope alive.

Reagan`s renewal of faith in the American success myth-symbolized by

''It`s morning in America''-has been so forceful that both Dukakis and Bush have embraced their own versions of it. Dukakis seeks to revive American innocence, and Bush trumpets the theme of American omnipotence.

For Dukakis, who meticulously avoids criticizing Reagan, there should be a chicken in every pot. Morning in America will truly break when everyone can participate in the gospel of success and when foreign policy is reinfused with idealism. For Bush, the sky is the limit; the vision underlying the Reagan Revolution needs to be expanded so America can ''continue to move forward.''

Limit government regulations, lower taxes and maintain a vigorous defense and the American Centruy will last indefinitely.

It is a good bet that neither candidate really believes his own rhetoric, but in the pharisaical literalism of our times, both feel compelled to utter neo-optimistic incantations. Yet the words of both candidates ring hollow. This is in part because neo-optimism lacks the circumstantial relevance of the original Reagan message, which was cast in dramatic relief against the relentless stagflation of the Carter years.

After six years of uninterrupted economic growth, record low unemployment and the re-emergence of detente, it is difficult for either candidate to generate much public interest in new political directions. By the same token, the massive budget and trade deficits that are also part of the Reagan legacy require voters to suspend belief at promises of even greater prosperity.

Symbolism aside, the American innocence/omnipotence theses are anachronistic. To be sure, Reagan`s efforts to return to days when Howard Johnson made ice cream in his back yard and when the U.S. was an impregnable fortress were no more realistic. But Reagan`s Paul Bunyan-size persona and narcotizing rhetoric, such as ''America is back,'' induced a traumatized, self-indulgent public to relive the past. Neither Dukakis nor Bush possesses the same power to persuade, let alone mesmerize, or the advantageous circumstances in which to work Reagan`s magic.

This is not to say that Dukakis` goals are not admirable. But job retraining, affordable housing for all, health care and day care and a war on drugs will require vast sums of money. The promises in the office-memo Democratic platform will cost some $37 billion a year to implement. Taxing the rich to pay for such redistributive liberalism would stifle the investment needed to promote economic growth; taxing the middle class could alienate the very constituency the Democrats are trying to woo.

Similarly, in an increasingly interdependent world, few would quibble with the need for greater internationalism in foreign policy or progress in arms control. But a naive faith in international institutions can be a dangerous substitute for power politics, and opposition to nuclear

modernization could undermine the goal of arms reduction. And what will be the source of funds for the conventional defense initiative Dukakis advocates?

For his part, Bush, the born-again supply-sider, has vowed not to raise taxes (period), when many Republicans such as Sen. Bob Dole and Federal Reserve Board chief Alan Greenspan openly conceded that without a tax hike, putting more than a dent in the budget deficit will be impossible. To his credit, Bush emphasizes the need for conventional arms reduction. But he also cautions against rapprochement with the Soviets even as Reagan treats Mikhail Gorbachev like a long-lost friend. Getting Reagan to veto the Senate`s defense authorization bill may make Bush feel he is standing taller, but the specter of Gramm-Rudman nullifies the prospect of squeezing more defense dollars out of Congress.

There is fitting irony in the neo-optimistic shadow the Reagan years have cast on the 1988 election. While the Gipper will be clearing brush at the ranch, the fiscal extravagance of Reagand circumscribe America`s ability to project its power worldwide.

The economic clouds already gathering, however, may have a silver lining if they prompt the next president to devise a new social contract, both at home and abroad. Domestically, such a contract would involve closing uncompetitive industries, offering tax incentives for productive enterprises and encouraging workers to relocate to new labor markets in exchange for government retraining programs. In foreign policy, a new social contract would mean greater mutuality in America`s relations with its European and Asian allies and a more businesslike policy of accommodation with the USSR and the Third World.

In the probable eventuality of a prolonged recession, the nasty truth is that for the next president, whether Dukakis or Bush, neo-optimism will yield to the politics of restraint that Carter advocated eight years ago. Ironically, that beleaguered leader, whose prognostications the townsfolk rejected in 1980, may enjoy the last laugh of this morality play.